On Thursday the Consumer Financial Protection Bureau Student Loan Ombudsman released a report finding consumers complain of servicing problems that make it difficult to get lower student loan payments tied to their income. Student loan borrowers seeking to take advantage of income-driven repayment plans with their federal student loans complain to the CFPB about prolonged processing delays and wrongful rejections by their student loan servicers. These delays and rejections can result in increased interest charges and lost eligibility for certain federal benefits and protections.

To help borrowers overcome these obstacles, the CFPB is publishing a prototype “Fix It Form” that servicers can use to improve the level of service they provide.

"Student loan servicing breakdowns can stack thousands of dollars of hidden costs on the backs of borrowers who can least afford them,” said CFPB Student Loan Ombudsman Seth Frotman. “Too many student loan borrowers are struggling to take advantage of their right to pay based on how much money they make. Servicers who want to better serve their customers can take the immediate steps recommended in this report to clean up this broken process.”

Student loans make up the nation’s second largest consumer debt market. The market has grown rapidly in the last decade with about 43 million Americans now owing money. The CFPB has estimated that the combined total for outstanding federal and private student loan debt has reached nearly $1.3 trillion. The majority of this debt is from federal loans. Third-party private servicers typically manage the repayment of federal student loans, and borrowers depend on them to facilitate successful repayment.

Since 2009, the vast majority of borrowers with federal student loans have had a right under federal law to set their monthly student loan payments based on their income and family size. For borrowers who experience financial hardship, these income-driven repayment plans can make a real difference. For borrowers who are unemployed or earn low wages, payments under these plans can be as low as zero dollars per month. In addition, the federal government forgives the remaining balance on loans after the borrowers have made timely payments for 25 years, or in some cases 20 or even just 10 years.

As of the first quarter of 2016, about 5 million student loan borrowers were enrolled in an income-driven repayment plan. However, a recent government report noted that many eligible consumers with federal student loans are not taking advantage of the program, with many being driven needlessly to default on their loans. The Bureau estimates that one out of four borrowers is currently in default or scrambling to stay current on their student loans.

Thursday’s report analyzes complaints submitted to the CFPB between Oct. 1, 2015 and May 31, 2016. The Bureau handled approximately 3,500 private student loan complaints and 1,500 debt collection complaints related to private and federal student loans during that time. For the last three months of this period, the Bureau took in 2,400 federal student loan servicing complaints. A top complaint had to do with income-driven repayment plans, with borrowers saying they encounter delays and breakdowns after they send in an application. Among the issues that consumers report facing:

Application abyss.

Repayment rejection.

Recertification replay.

Costs of thousands of dollars over the life of the loan.

Fix It Form

The report recommends that servicers improve the level of service they provide to student loan borrowers applying for income-driven repayment plans. Servicers can use this Fix It Form to help borrowers understand whether their income-driven repayment application has been approved, denied, or needs to be corrected. When a borrower needs to make a correction or provide more information, servicers can use the Fix It Form to help consumers understand how to "fix it" and stay on track. Specifically, the form would: